Is SpaceX Stock a Buy After Plummeting 28%?

Space Exploration Technologies (NASDAQ: SPCX), or SpaceX for short, was the largest IPO in history. Despite going public at a $1.8 trillion valuation, the stock surged from its IPO price of $135 to as high as $225 per share. However, since then, it's been mostly downhill.

The stock plunged to $105 just weeks after going public, but has since recovered to $144. That's still roughly 30% below its high.

IPO stocks are infamously volatile, so SpaceX's whiplash movement isn't necessarily out of the ordinary. Of course, the key question now is whether SpaceX is a buy now that things have stabilized after the plummet.

Here's what investors should know before they buy SpaceX stock today.

Image source: The Motley Fool.

SpaceX is performing across all three businesses

The company is most famous for its rocket launch services. But under the hood, investors will find three distinct businesses.

Connectivity, which encompasses Starlink, is the most profitable segment by a comfortable margin. There's also the space segment, which houses rocket launch services. Lastly, the super intelligence (AI) segment was created following the acquisitions of xAI and Cursor within the past year.

As a whole, SpaceX generated $14.6 billion in revenue in the third quarter of 2026, up a whopping 161% year over year. Super intelligence added $6.7 billion in incremental Q3 revenue from the Cursor acquisition, as well as growth from Grok and Grok Bot.

Connectivity grew revenue by 69% to $5.25 billion, and has reached 13.6 million subscribers, 89% more than a year ago. Not to be forgotten, the space segment did conduct Starship's first revenue-generating mission in Q3, a step in the right direction as development continues.

It seems clear that SpaceX is doing an excellent job at executing across its businesses.

Valuation remains a concern, especially given the Musk and Tesla factors

The hesitation with SpaceX stock primarily concerns its valuation. Annualizing SpaceX's Q3 revenue puts it at roughly $60 billion. I'll assume that continued growth puts SpaceX at $100 billion in revenue in 2027. That translates to a valuation of roughly 20 times 2027 revenue, using the stock's current market cap of approximately $2 trillion.

This is where things get tricky.

Although few doubt CEO Elon Musk's brilliance, he has a reputation for bold promises and has made headlines for predicting that SpaceX's annualized revenue could reach $500 billion to $1 trillion by as early as the end of next year. That's very ambitious. Musk already has over a decade of Tesla promises and hasn't always delivered on time or at all.

On top of that, it creates a very wide range of outcomes for how SpaceX's business grows over the next several years. Achieving anything close to that target would have made the stock an obvious buy in hindsight today. It complicates how investors might evaluate the stock, and that's not even getting into recent speculation of a potential merger between Tesla and SpaceX. Tesla's $1.6 trillion market cap would make that a historic tie-up.

What buying the stock ultimately boils down to

Wall Street's price targets reflect this wide range of outcomes I'm referring to. SpaceX has targets from analysts ranging from $118 per share to $800 per share. That said, the overwhelming consensus is that SpaceX stock is a buy. And that's where I'll bring this to. Buying the stock is essentially a vote of confidence in Musk to create shareholder value over the long term. He has certainly done that with Tesla.

All in all, investors have solid reasoning to buy shares here. But since there are still so many variables that could affect the stock over the coming years, investors may want to exercise caution if they do buy. Maintain a well diversified portfolio to minimize your risk. If SpaceX does rocket to $1 trillion in revenue, even a little bit of stock can go a long way for your portfolio.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.